Q1 2025 Insurance Trends Show Shift to Risk-Based Pricing and Demographic Change
TransUnion's latest Insurance Personal Lines Trends report for Q1 2025 reveals a 10% increase in auto insurance shopping and a 5% rise in home insurance shopping year-over-year. Notably, higher-risk consumers have become the most active auto insurance shoppers for the first time since Q4 2021, indicating a shift back to traditional risk-based pricing strategies by insurers. This change means insurers are focusing premium increases more on higher-risk segments while rates for low and medium-risk customers are stabilizing, driving higher-risk consumers to seek better deals.
The report highlights dramatic demographic changes impacting homeowners and insurance markets. Only 41% of Millennials owned homes in 2024, a decline compared to over 50% of Generation X at similar ages in 2009. This has contributed to a rise in multi-generational households, with the percentage of credit-active occupants living alone dropping from 45% in 2009 to 38% in 2024.
Natural disasters have doubled in frequency and cost, with 27 billion-dollar-plus events in 2024 costing approximately $183 billion. This significant escalation in catastrophic weather events continues to create uncertainty and cost pressures for insurers, particularly in property and casualty lines.
Supply chain disruptions for vehicle and home repair parts remain a critical factor influencing insurance pricing strategies due to ongoing cost uncertainties. These market dynamics suggest possible future broad-based premium increases if cost pressures worsen.
TransUnion's data indicates a reversion to pre-pandemic insurance shopping patterns, where price sensitivity correlates closely with risk profile. The stabilization in mid- and low-risk rate segments reduces their search activity, contrasting with sustained shopping among higher-risk customers.
The homeownership and household composition shifts suggest insurers will need to adapt products and marketing strategies to address evolving consumer risk profiles and preferences. Multi-generational households present distinct risk attributes and represent emerging target segments for personalized insurance solutions.
Patrick Foy, Senior Director of Strategic Planning at TransUnion Insurance, comments on the importance of insurer flexibility in developing policies and outreach to effectively engage these new household demographics and risk categories.
TransUnion's TruAudience marketing solutions aid insurers in identity resolution, audience targeting, and measurement, enhancing marketing efficiency in this changing landscape.
The report excludes data from states where credit-based insurance scoring is not used, such as California, Hawaii (auto), Massachusetts (auto), and Maryland (property), ensuring the analysis reflects applicable rating environments.
Overall, TransUnion's Q1 2025 insurance trends underscore insurers' strategic challenges and opportunities amid demographic shifts, risk-based pricing normalization, and escalating catastrophe exposure. Insurers are encouraged to evaluate risk segmentation and product innovation to align with these evolving market conditions.